The specter of China playing the “rare earths card” is looming larger this week.
According to the Global Times’s twitter feed, U.S. military equipment firms will likely face restrictions of Chinese Rare Earth supplies in the near future, as China’s economic planners will “study and roll out policies on rare earths as soon as possible.”
The Global Times is an English language newspaper published by the Communist Party of China’s publication People’s Daily.
As followers of ARPN well know, China has a near-total supply monopoly on rare earths, which are key components of a wide range of applications ranging from household gadgets over hi-tech military equipment to renewable energy technology.
In recent months, trade tensions between the United States and China have deepened leading observers to sound the alarm, because the lack of domestic REE sources has created a serious strategy vulnerability vis-à-vis our adversaries, as underscored by the 2010 decision by China to cut of REE exports to Japan.
While some observers dismiss the looming threat of a Chinese REE supply embargo and cite a diversification of sources over the course of the past decade – including the Mountain Pass mine in California – which have reduced China’s supply monopoly to 77 percent, ARPN expert panel member and president and founder of public affairs firm J.A. Green & Company, points out via Twitter that
“Citing the decrease to 71% Chinese production ignores other parts of the supply chain. We should break down reliance on China for #REE metal, alloy and magnets to be a useful statistic.”
He further cautions that “[t]o rely on ‘market forces’ to take care of the issue is dangerously naïve from a national security perspective. This is not a case of free trade, but rather Chinese market manipulation (as validated by the WTO ruling).”
“Mountain Pass is a valuable resource, but is not a comprehensive solution. It is still reliant on the Chinese, it does not move past the concentrate phase of the supply chain, and is lacking in heavy REEs.”
Thankfully, there are indications that our policy makers appear to awaken to the seriousness of the situation, and the just-released critical minerals strategy report by the U.S. Department of Commerce acknowledges that “If China or Russia were to stop exports to the United States and its allies for a prolonged period — similar to China’s rare earths embargo in 2010 — an extended supply disruption could cause significant shocks throughout U.S. and foreign critical mineral supply chains.”